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Vocational education investment and middle-income group expansion in China

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  • Chen, Qi
  • Li, Xinghai

Abstract

This study examines the relationship between vocational education investment and middle-income group expansion in China through the lens of industrial structure transformation. Using panel data from 25 Chinese provinces across six periods, we employ standard regression and threshold effect models to analyze this complex relationship. Findings reveal that vocational education, particularly at the secondary level, significantly contributes to middle-income group expansion. This study proposes a novel dual-threshold paradigm to show that the efficacy of vocational education investment exhibits linear and nonlinear relationships with industrial structure growth. In particular, we determine a positive correlation with non-agricultural sector growth and an inverted U-shaped relationship with industrial structure optimization. These nuanced findings have important implications for educational investment plans in emerging economies undergoing industrial transformations.

Suggested Citation

  • Chen, Qi & Li, Xinghai, 2025. "Vocational education investment and middle-income group expansion in China," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002892
    DOI: 10.1016/j.frl.2025.107025
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    References listed on IDEAS

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    1. Guo, Dong & Wang, Anyi, 2020. "Is vocational education a good alternative to low-performing students in China," International Journal of Educational Development, Elsevier, vol. 75(C).
    2. Wu, Jianan & Guo, Cheng & Liu, Xiaojing & Dai, Jiapeng, 2025. "Policy-driven employment structure transformation: The role of innovation and education investment," International Review of Economics & Finance, Elsevier, vol. 98(C).
    3. Daron Acemoglu & Pascual Restrepo, 2022. "Tasks, Automation, and the Rise in U.S. Wage Inequality," Econometrica, Econometric Society, vol. 90(5), pages 1973-2016, September.
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